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tv   Closing Bell With Maria Bartiromo  CNBC  February 7, 2013 4:00pm-5:00pm EST

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story anymore. >> jim, jump in here. what are you hearing from clients these days? >> what i'm hearing from clients is they are scared of the bond market so the federal reserve board has pulled off this magic parlor trick of convincing everybody that they should be more afraid of bonds than they are of stocks, and what i'm worried about here, and i am bullish, maria, for that reason, but what i'm worried about is people are complacent for all the wrong reasons saying all the stars are aligned for stocks. get a little pullback and ought to buy that. looking at the biggest tax hike we've seen since 1937 and gasoline prices at the highest level this time of year ever. we've got a lot of issues and everybody on this program keeps saying that spain is getting better. it is not getting better. every -- every metric you can look at in spain is getting worse, whether it's unemployment, whether it's retail sales, whether it's gdp, so this year we're going to see disruptions and a lot of volatility. i am bullish, but market is way too complacent, and we could see bigger air pockets than we're
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expecting. >> i couldn't agree more with that. i think the headline risk is going to come back into the market, and that is what's going -- that's the biggest danger to this rally which is definitely tone. >> so what do you think -- >> maria, the other thing, you could -- and the other thing missing is growth. can you talk about apple transitioning from a growth story to a value story, and that's all fine and good. most of the arguments for stocks right now are about valuations, book values, dividends, et cetera, et cetera, et cetera. the growth is the missing component, and at the end of the day if we don't start to see better growth, and we've spent more money on a more abundant economy than we've ever had this, rally, and i do think the market will move high, but this rally could peeter out by the end of the year >> isn't it a vicious cycle? how do you get back to growth then, pace? >> i think the cash on the sidelines. >> one of the things is going to be manufacturing.
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>> we've been talking about cash on the corporate balance sheets for a long time, right? >> right. >> doing share buybacks and merger acquisition activity. we're starting to see some of that, but i think the biggest catalyst would be an increase in capital spending, even if it's just because of pent-up demand, starting to see that in housing. we'll see that in capital spending and that will offset the fiscal drag effects that we talked about a few minutes ago, higher taxes, maybe lower government spending. you could make an argument that that's better spending, better economic growth. >> i don't think you'll see a spin on capital. >> the story is going to be on housing, because house will go have values. people want a house. college grads are down to 3.5% unemployment rate and people can actually afford it. this is not a bubble. i think stockton is totally wrong on that one. >> when do you expect a spike in interest rates?
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this could happen as the economy improves? >> not going to happen any time soon. >> which clearly would cause a disruption in equities. >> by the end of the year the treasury -- i think you'll see ten-year 2.25, bouncing between 2 and 2.25 like it used to be bouncing between 1.75 and 2. it will just kind of keep doing th that. >> is it healthy -- is it healthy -- >> the interest rate spike will mean too much on the balance sheet. >> is it healthy that the only driver has been the federal reserve? >> that's it. decrease the quantitative easing. that's when we'll see the real spike. if interest rates go up to 2.25% because people are taking money out of equities and the economy is growing a little bit better, that's fine. it's when we start to see incremental tightening at the fed. >> we need some qe from the private sector. >> tightening from the fed? >> good luck on that. >> not getting it though, jeff.
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>> well, i know. >> they believe in what they are doing, and it hasn't helped the economy. >> we know we have somebody holding our hand so there's no point in doing it. until they step out of the way, there's nothing to trigger those animal spirits. >> great conversation. appreciate it. see you soon. >> meanwhile, legendary investor jim rogers is, now short a certain investment. we'll find out what that is, his take on the stock market and the current levels and a lot more. good toy see you, jim. >> in town from singapore. >> i am. >> i have a new book coming out this week. >> and we'll talk about this. >> and an activist investor takes aim at apple's reserve. what he's after and why apple might be holding on to the $137 billion in cash on the balance sheet. well, will it be one inch of snow or three feet? a blizzard is brewing, maybe. the snowfall predictions are all over the map today. coming up, we'll try to get the best prediction from the weather channel. plus, we'll find out how nemo
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>> welcome back. a bad open and better finish. bob pisani wraps up the day that
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was. >> a lot of efforts to mastermind a top here and didn't amount to anything. take a look at the dow jones industrial average. heavy selling at the open. the futures prior to the open fairly flat, but they sold right into the open for the first 40 minutes and didn't really amount to much, fractional decline in the dow jones industrial average. the euro weakened dramatically. mario draghi came out and said he expected inflation to fall and did not give a particularly optimistic outlook about the near term economy there. had problems in europe's sectors. big leaders and housing stocks, biotech stocks and materials and energy all weak throughout the day. how about some of the retailers. pretty good numbers from the retailers considering there was a lot of discounting going on. gap raised their guidance. profit taking for some concerns for february overall. macy's also had very good newspaper and raised their estimates as well. did you so the new jersey casinos. a legalized gambling an line
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bill was vetoed. zynga went up, boyd went up. and finally all this anxiety about whether we're at a market top but it doesn't amount to much. look at this. a complete roller coaster ride on the vix. intraday, spike up and end right where we started early in the day. back to you. . >> my next guest is not big on the stock market and is also very bearish on government bonds. what does jim rogers like right now? he joins me to talk investment plays and has a new book out called "street smarts." good to have you on the program. >> delighted to be here. you were talking before, it's all artificial what's going on. the federal reserve is printing money as fast as they can but the bank of japan said we'll bryant unlimited money. you know what the federal reserve said we'll match you and we'll print money, too. this is insane. >> central bankers all over the globe printing money. you think this is a sound economy? >> i know you don't like stocks,
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if you want to fight every major central banker out there. i'm shorting government bonds and i'm actually making money at the moment which surprises me but i'm making money on my bond shorts. maybe it's the end of the 32-year bull market. if it is, i'm making a lot of money in bonds. stocks may go up, too, but i don't see how this can last. i expect after the german election, you know, a lot of good news coming out of europe this year because mrs. merkel wants to win, but after the german election where's the good news coming from? >> you think europe becomes another problem? >> europe's not finished. >> right. >> mrs. merkel is going to say it's finished. >> for some reason it's not on the front pages anymore and i'm wondering -- >> there's an election in germany. germany wins europe. she has to win her election, she knows that. >> and an election in italy and bonds coming due, debt due, interest payments due in spain so you do have cat lifts on europe, i agree with that. >> more problems coming down the
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road, but at the moment they have gotten good news from mrs. merkel. >> so in terms of the stock market, i mean, we've have a rip-roaring 2013, beginning of the year and a rip roaring end of the year. what's behind it other than the fed? >> and the bank of japan. the bank of japan has said we'll print even more money than the fed. he said unlimited, unloimted amounts of money. that's a lot of money. >> you would buy no stocks. >> buying russia. >> you're buying russia? >> russia is terribly depressed. nobody likes russia. i'm buying the bonds, the currency and stocks >> you think you'll be able to get your money out of russia when you want to? >> maria -- >> what's the answer? >> hold on. i've been bearish on russia for 46 years. i first went there in 1966. i've changed my mind and, yes, i think -- i'm not giving my money to putin, i hope. >> really. >> i for the first time in 46 years have decided to invest in russia. >> so you believe there's the rule of law there. you believe that this is --
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you're buying russia over the united states of america? >> everybody is pessimistic. listen to your question. everybody is pessimistic on russia. russia is changing. that's how you make money. you find something that everybody hates, including me, including you. when it's changing and that's how you make money. >> everybody hates apple right now. would you buy it? >> no, no, i'm short apple. >> how come? >> because short in the fall because it went through the fall. >> september. fantastic. >> anyway, i wouldn't buy apple. i may have to cover my short, but, no. that's -- that was the sidelines for me. >> the banks, they have made people lots of money. >> they haven't made me any money over the last year. >> negative on the banks. >> short jpmorgan calls. they all expired worthless, still short a few and they are not expiring worthless so i've made money. >> not made any money other than
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shorting jpmorgan calls, made no money in banks. >> and any other areas. the economically sensitive name has also become a leadership group here in the u.s. >> you're paying. that's a pretty big market. russia. that's a pretty big market. i'm not -- short bonds, and agriculture, but we talked about agriculture before. >> talking about agriculture in a second. let's talk about japan. japan has been on fire. you've got the government creating all of this stimulus. is that going to end badly as well? >> japan, you know, is down 75%. 75%. >> but in the last couple of months what is it up? >> last couple of months, coming through the roof. thank you, japan. thank you, mr. abe. >> what about the nikkei average? >> i know what it's been doing. japan will continue to print money. it's not good for the world. it's making markets go up, but in the meantime i'm participating, you know, the yen is collapsing in japan, but the stock market is going through the roof. >> but if they are printing all this money in japan and you're
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positive on it, but they are printing all this money in the u.s. and you're negative on it? >> the american stock market has hit an all-time high. the japanese stock market is 75% below its all-time high. maria, i know your momma tout you to buy low and sell high. it's down 75%. the trade with china is booming. i hope i'm buying low and selling high. >> how long do you think this lasts in japan? a lot of momentum going on there. >> yeah, i know. that's the problem. a lot of momentum and i'm not very good at short-term trading. why couldn't it double? why couldn't it go to 20,000 if he prints a lot of money. the yen may collapse but the stock market could go to 20,000. >> because of the valuation that we're talking about. >> he's printing money. he said unlimited. when you throw a lot of money out window, maria, somebody catches some of it. there's the wisdom tree has a whole etf, called an etf. >> yes, yes. >> dxj.
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>> which is neutral on the currency. >> yeah. >> that's a great way to play japan. >> they hedge out the currency. let me ask you about rates in this country because some people are worried in fact they will start to see rates creeping up. we'll see fast and furious. is that what you would expect? >> i'm short bonds. short the 30-year bond. >> when would that happen, jim, come on, this year, next year? >> i don't expect it to spike this year unless something strange happens, if we go to war with iran, yeah, it will spike up, but it can continue to creep up. not good at market timing. what about commodities, jim, so right on this face for so many years? >> yeah. yeah. i would rather own agriculture. how would you participate as an investor in agriculture? do you do an etf? >> i have an etf that steroids
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on the new york stock exchange. i'm not here to talk about etfs. i'm here to sell books, for goodness books. >> give me the "street smarts." what's so smart about the street today? >> today? >> yeah. >> i told. >> you what are the street smarts from jim rogers right now. >> sell bonds, short government, long-term united states government bonds right now, well, right now. >> mm-hmm. >> and that's probably main u.s. investment other than i'm long the dollar. everyone is criticizing the federal reserve. >> why aren't you criticizing the federal reserve? >> i'm trying to take them to every side of every argument here and be neutral here. bernanke was already printing lot of money. he didn't economy currencies or in finance. all you understand is printing money. read his studies of the depression. no mention of debt or no mention of foreign trade or currencies.
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he doesn't know anything about what's going on in the world. he just understands printing money. we don't have the leaders in washington, the president and congress >> you think they do? >> maria, you're bad for my nervous system. oh, my gosh. i want to talk about your book for a second. your kwun tum fund with george soros back in 1937 delivered a 410% return. you say it's possible. >> not for me. i'm not working that hard. if you work that hard and find something that's driven and ambitious and used a huge amount of leverage, can i do it? >> of course it can be gone. and you talk about that in the book. >> i did. >> you are mentioned mexico. >> the problem with mexico is oil is drying up and running out. yeah. they have had a wonderful time. they have a young population,
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and the mexican oil is drying up. that's how the government gets something like 40% of its money from oil, but it's drying up. here in the last days, maybe they will spend a lot of things and it will look great. i wouldn't put my opinion there to money. >> the best single best opportunity from jim rogers mind is now, forget about the bond market right now? >> whatever is strong. i guess i'd have to say right now. shorting bonds. >> why is russia so intriguing to you? >> it's a disaster. nobody likes russia. do you know anybody who can even small russia? most people can't stand russia, you know what i mean, can't stand putin. putin is changing though. if i'm right putin is changing, myanmar, we've talked about myanmar. the best new thing is probably russia. >> all right. >> or north korea. >> north korea. >> let not waste our time. >> north korea, it's fabulous. >> the only way to invest is buy stamps or coins, and your viewers are not going to go out and buy north korean gold and
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silver coins, but that's a fabulous, fabulous opportunity. >> would you buy gold at the levels that they are at. i own gold. jim, great to talk with you. linked in out with earnings. >> reporter: linkedin earnings coming in higher than expected and revenue coming in at $304. expectations were 280 million and a big jump year over year. the real surprise here is the gap, the non-gap diluted earnings per share for the fourth quarter was 35 cents. wall street had within expecting 19 cents, and that's up from just 12 cents a year ago. all leave it linkedin's divisions performed better than expected. we saw talent solutions, the hr recruiting tool. revenue grew 90% year over year. marketing solutions up 68% and
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now a quick note about the guidance. the quick one revenue dresser. the company projects the full-year 2014 guidance, revenues are lighter. time and time again the company beats expectations. back over to you. >> forget about snowpocalypse heading to the northeast, after-the-bell earnings out now. let's get over to josh lipton. >> reporter: we want to begin with coinstar. remember, that stock already down 10% over the past 12 month. it's now getting shredded in after hours. coinstar is falling, beat on the bottom line but missed on the top line and coinstar you see getting punished in the after hours. another one to watch is act vision, a different story, beats on the top and bottom line. act vision providing first-quarter revenue guidance
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above estimates, and can you see that stock popping. the final one. hasbro beats by a penny on the bottom line and maeches on revenue. >> apple has a problem, we think, which is it has a cash problem. it has sort of a mentality of a depression. >> and apple spikes today on its response to einhorn. details coming up next and diamond in the rough. interim e-mails show some jpmorgan chase employees may have known about the serious flaws with the home loans leading up to the financial crisis, and how do you make money in this turbulent mark wall street's pros answer that when we return. (announcer) at scottrade, our clients trade and invest
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with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. awarded five-stars from smartmoney magazine. welcome back. yet another lesson to think twice before hitting the send button. uncovered e-mails with jpmorgan chase now show employees may have known about serious flaws with b homes loading up to the financial crisis. >> these e-mail documents are exhibits in a multi-million dollar lawsuit of the belgian bank dexia. dexia bought some $1.6 billion in mortgage-backed securities from them during the housing boom, and the allegation is that hidden in some of these bundles
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of mortgages, as many as half of the loans were bad. one thing that's clear in the e-mails, there was a whole lot of pressure town load these securities. a 2006 besterns e-mail reads like something out of "glen gary, glen ross." >> use the dealer desk. get on your game. we are a moving company. not a storage company. in fairness, there is nothing sinister about pushing your team to sell deals, but hiding their quality which dexia said the banks did is another matter. another e-mail from 2005, in order to make us more competitive on bids with larger subprime sellers, we're going to reduce the amount of required due diligence. november, 2005. a washington mutual director writes wamu has become a dumping ground for some of our sellers for loans that are deficient. jpmorgan has moved to dismiss the case saying in court papers that dexia is a sophisticated financial institution, and even if there were faulty disclosures, which jpmorgan says there weren't, there's no
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evidence that dexia relied on them. these e-mails are not as juicy in tone as the ones the other day, but more proof, maria, that e-mail is forever. >> thanks very much. market down better than 100 points at its worse but finishing down only 42 points or so. what happens tomorrow. 30 seconds on the clock with our next three guests, steven rosen and mike mcgreen of hightower and cnbc market analyst warren myers are answers right now. good to see you. steve over to you first, 30 seconds on the clock. what's your dollar trade tomorrow? >> we're watching the euro dollar. we think that's the most important thing. the equity markets the tail. we're being wagged around. all about central banks as jim was referring to you earlier on the show. we really think that right now the u.s. is the only central bank towards hinting at ending their quantitative easing so we think if the euro dollar breaks 133 we could see finally a selloff that holds in the u.s.
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>> thank you so much. mike, you're up, your case on why you think china is worth watching. >> with china's economic growth seemingly back on track and because the markets are closed all of next week for the newyear's holiday, we'll watch again tonight when they release their cpi data. this month it's expected around 2%. if they come in above expectations again, we'll watch very closely to see what the people's bank of china has to say about things like lending curves. obviously this is something that has the ability to impact market movement in the morning. >> all right. we'll watch, that and warren, what's topping your watch list for tomorrow? >> well, i'm also watching china and the u.s. both are reporting trade numbers tomorrow, the two largest economies in the world. in china we're looking at their trade balance expecting to be around 25 billion. here in the united states tomorrow, we release that number and we're looking for around a negative 45 billion. i think if they come this slightly better on both counts as your previous guest just said
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and in particular in china with the time off there, we can get a really nice push going forward and if the u.s. number comes in solid it would be one more strong number we've seen as marginally better economic data out of the united states. >> we'll leave it there. appreciate your time. we'll be watching all of those stories tomorrow. thank you. up next, tracking nemo. now a blizzard warning for new york an connecticut. getting more themes here. we'll go live to the weather channel to get the latest forecast for the blizzard warning and apple responds to something green light capital's davidinion said and the stock popping at the end of the day. stock popping and we'll have more on that in a moment. get ready for a lot more of that new-plane smell.
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makes it easy for anne to manage her finances when she's on the go. even when she's not going anywhere. citibank for ipad. easier banking. standard at citibank. welcome back. in a rare move today apple is responding to an investor with a beef, but it was no ordinary investor. it's davidinion of green light capital slamming apple's cash right here on cnbc this morning. our own scott wapner was hosting "squawk" this morning and did the interview and he's still here. scott, i don't know how you're still standing but thanks for sticking around for us. pretty extraordinary what happened, right? >> extraordinary, because a big
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story, maria. the day started with davidinion calling in to "squawk" to call out apple with its massive cash hoard and ended up with apple issuing a rare response to the hedge fund giant. all beginning with einhorn saying he wants apple to issue preferred stock, arguing it's the best way to use the company's $130 billion plus cash hoard. >> people who have gone through traumas, they sometimes -- and apple has gone through a couple of traumas in its history, they sometimes feel like they can just never have enough cash. i remember my grandma roz, she was a depression-era woman from her childhood, and she wouldn't even leave me a message on my answering machine so i could call her back because she didn't want to get charged for the phone call. >> einhorn says he approach apple with the idea but was rejected and now he's suing and asking shareholders to vote against a proposal that would eliminate apple's ability to reduce the preferred shares.
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apple actually responded, something they rarely do saying they would thoroughly evaluate greenlight's proposal adding that its management team and board of directors have been in active discussions about returning more cash to shareholders. on that response, guys, you saw apple shares. look at that move right before the closing bell. they did in fact spike, so an interesting story takes a really interesting turn just before the bell. maria, you know. apple doesn't usually respond to any of this kind of stuff, and they certainly did late this afternoon to davidinion. >> really amazing. thanks so much, scott. want to get reaction with the "wall street journal" and ben parr of c-net. spencer, your reaction to this rare statement from apple? >> pretty unusual. apple is tight-lipped about stuff like this, it shows the increasing power of activist investors. when i was listening to mr. inion talk about the trauma that apple knew, i feel like he's talking about the old apple to a certain extent, apple run
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by steve jobs and the apple being run by tim cook, taking a fresh tack on a lot of issues, and, in fact, after much criticism about not issuing a dividend, tim cook made a big shift to last year and issued apple's first dividend in a long time so i think apple is -- does have a fresh perspective on this, and i'm not sure mr. inion will have as much luck this time. >> maybe, but they are still sitting on more than 100 billion in cash. isn't that the issue. >> well, yeah. they are sitting on a lot of cash, but the commitments they made to their dividend and stock buyback program over $45 billion over three years, that's a lot of cash, too, so the question is should the dividend be increased, and what structure should it be increased through? >> right. i think that apple shareholders are happy that they are getting a dividend, and i'm not sure that with the increasing competition that apple is facing, that the company is going to be willing to risk more of its cash and a higher dividend. >> ben, you say there's also something else apple could be
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doing with its huge cash pile. what would that be? >> there's a couple different things. the biggest issue right now is they need to figure out how to repatriate the cash. most money is overseas and people forget there's tax issues involved with trying to bring the cash back, but there's also a lot of acquisitions that they could do with it. apple doesn't typically do big acquisitions. their biggest one was next which was about 400 million, but i think what they should do with the money is use it for what you would call the boring stuff, deeper infrastructure, better production management, things like that that make the products better. that's a better use of the money right now. they are already going to give back 40 billion. >> will already give it back, but what would you like that cash to materialize into? you're saying new products, new innovations? >> i would say into strategic acquisitions that help make the existing product lines better. apple doesn't acquire a new product line. usually they acquire things that help the product lies. they acquired a company that helps with better flash memory.
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these are things that are not all that exciting but make the apple products a lot better and make it a lot easier and better to develop and to produce. i think those are better uses of its money. >> spencer, what do you make about what calipers said? they said they fully support apple and the proposal to support majority voting for the election of directors and require shareholder approval for the issuance of blank check preferred stocks. basically saying we're going against davidinion. how much juice does this davidinion proposal have? >> some juice and when apple responded and said they will consider the proposal that the stock went up, so there is some appetite for a higher dividend. however, to your point, there's a little bit of an east coast/west coast. the california retire pension fund, a lot of people in silicon valley are scratching their head right now because when they see
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this it smacks of financial engineering to a certain extent and the people in silicon valley will say what matters is innovation, okay? and apple stock is down right now, but if apple does recommit and sort of increase its level of innovation and going back to the level under steve jobs, the stock and the products will be better, and that will kind of take care of itself. that's really how you get apple returning value to shareholders. >> all right. we'll leave it there, gentlemen. this is a story we'll be following closely. see you soon, guys. thanks very much. thanks for joining us. up next, another showdown looming in washington as the automatic spending cuts get set to kick in on march 1st but for the stock market would a bad deal to avert cuts be worse than allowing the cuts to hit in full force and later, a major winter storm is threatening to slam the northeast with up to two feet of snow in certain areas. we'll take you live to the weather channel for the forecast. back in a minute. we built the s from the ground up to be the world's best sport sedan...
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welcome back. former treasury secretary bob rubin appeared on cnbc's "squawk box" and had this to say about automatic spending cuts scheduled to kick in on march 1. >> we have a skywest their we're facing. the sequester itself was a terrible, terrible piece of legislation t.arbitrarily cuts defense and non-defense without trying to thoughtfully do so. instead of being phased in it moves abruptly and it's far, far from clear that if it's put in place it will stick so in all respects it's a terrible piece of legislation.
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>> joining us now to talk more about that, laura tyson a business professor at the university of california-berkeley and is former chair of the president council of economic advisers under president clinton. she says the sequester is absolutely not necessary and must be avoided. bob mcteer is a distinguished fellow at the national center of policy analysis, former president of the dallas federal reserve and a cnbc contributor and says if they can't make a good deal willing to risk the side effects of the sequester. good to see you. thank you very much for joining us. >> thank you. >> lawyer, if the sequester kicks in, how much damage does it do to the economy? >> two recent estimates from the bipartisan policy group, 1 million to 1.2 million to 3 million jobs. last year the economy created 2.2 million jobs. this year we take out 1 million to 1.2. we take off a percentage point of gdp, but the real question is it's absolutely not necessary. it's bad policy and it's not necessary. >> bob, what do you say about that? you're willing to let the
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sequester happen, right? >> if necessary. i do think it's a bad idea but if it's packaged up with much more tax increases and we can't get a better deal, then this is better than nothing and maybe it can be fixed after it's allowed to take place. >> how do you get this fixed, bob? how do you come together and get a compromise going? >> well, i think one thing that would be very helpful would be if they would simply pass a law that allowed the pentagon to allocate the cuts in their best judgment rather than forcing certain cuts on them. that would be one helpful thing, but i think the bargaining power almost requires that we allow it to happen before -- before anybody is going to get serious about their negotiation. i agree. it's a terrible idea, but it's maybe a bad idea whose time has come. >> laura you say it's not next
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to happen. >> right. >> you say there's no debt crisis. how would you describe the 16 trillion debt. >> so what i would say, look, there were estimates out there at the beginning of the year we needed about $4 trillion to stabilize the debt-to-gdp ratio. we're about 60% of the way there. we do need additional revenue increases or spending cuts over the next decade, but let me emphasize. over the next decade. not at a moment in time when the economy has 7.9% unemployment and is operating under its capacity to the tune of maybe six percentage points below capacity. this is a terrible time to do what needs to be done, and it's also a terrible way to do it because it's like telling a business you have to cut everything the same percentage. that's not how a business behaves. if they are going to make cuts, they think through where the returns are highest on their spending. they don't cut those. you know what we do here. we cut non-defense discretionary. we cut defense too deeply.
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we're not investing in education, infrastructure, training, and we're not even doing anything to stabilize the debt-to-gdp ratio after 2020, 2022 because the entitlement programs are not touched. very bad policy. >> it just seems like there's an opportunity to come up with cuts, it doesn't happen, laura, so you say that's not the way a business operate. a business doesn't operate with no budget for four years either. we haven't had a budget in four years. >> a business operates when times are bad, and they can borrow. they do borrow. the u.s. government has been able to borrow at record low interest rates for the last few years. the only group that seems to be determined to slow the economy down because they are worried about the ability of the government to borrow are those who are fostering the sequester. the u.s. government has been able to borrow. it has run itself as an economy, running an economy which is in slow growth where the deficit automatically picks up because
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there's slow revenue coming in and there's the need to spend on programs to help ease us through a slow period. it was wise policy, wise policy. >> bob, what do you think? >> well, i agree with laura that a better policy would be to put these cuts into entitlement reform and have them occur over time rather than immediately and abruptly, but it doesn't seem like the other side it s willing to engage in discussion of entitlement reform right now, so maybe we need to go ahead and do what we have to do and then keep the negotiations open. >> is that the issue then, laura? since we can't come to a deal when the republicans feel like they have leverage, they have got to do it when they can do it? >> i honestly don't think so. we have elections coming up in two years. i've heard republican members of the hill saying that this is what the public wants, the public wants a sequester. the public doesn't want a sequester. when the public realizes what a
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sequester means for jobs in their community, for education programs in their community, for the fact that even the relief for hurricane sandy will be cut, they will say who did this t us? why did they do this? we don't need to do this now so i think we should -- we've done plenty of deficit reduction for right now. the newest cbo numbers show the deficit is going to come down dramatically in the next couple of years. let's get to another election. >> can you really say -- can you real say we've done deficit reduction when in fact the only thing that was cut was the projected it was -- laura. we still have $16.4 trillion in debt. that's -- >> yes, and i want to ask you, maria, what's the concern about that? can we pay off that debt? all of the world's bond markets and capital investors think we can. i think we can. i don't know why we want to fix it sate on that number right now. i want to fixate on fixing debt to gdp ratio.
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i said, there was more work to be done. we do not have to do it this year and we do not have to do it in this way. >> real quick, what are the olds of the deal? bob? >> ah, 30%. >> 30% odds of a deal. you agree with that, laura? >> you know, we might blow through the sequester deadline. i think once people look at the cuts that are required, they are going to back away, so, maybe not a deal before, but a deal after. >> all right. we'll leave it there. thank you to you both. appreciate your time tonight. see you soon. bob, laura, thank you. bracing for the wrath of mother nature. that's next. a massive winter storm threatening to dump up to two feet of snow in some parts of the northeast. take you live to the weather channel next. we'll get the storm track.
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welcome back. double check those travel plans this week en. major winter storm is threatening to dump up to two feet of snow in the northeast. let's go live to chris warren at the weather channel, giving us the latest storm track. over to you, chris. >> maria, this has potential to be a life threatening situation. already, national weather service posted blizzard warnings from new york city to hartford, boston, up to portland, maine. this is going to be a big storm. it is starting off as two storms. one to the north, one to the south here. they're going to come together,
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one with the cold air, one with a lot of moisture and develop, really get cranking during the day, into the evening on friday, this is how it plays out. not quite together yet and then in the evening, things are really going to go downhill. heavy snow, this does include new york city, 95 to boston. the storm now as one overnight friday into saturday. and it's still going to be hanging in there saturday evening for parts of new england. when it's all said and done, so than two feet of snow. and it's possible new york city and long island, foot, maria, maybe a foot and a half. >> all right, chris. thank you so much. we have to gear up for that. appreciate that. my thoughts on a potential trouble spot for the markets. that's next in observation. stay with us. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket.
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we call it goals driven investing. you have unique goals. how about a portfolio specifically designed to achieve them? ♪ expertise matters. find it at northern trust. and finally today, my observation on what could drive the direction of the next leg in this market. and while i have been saying for some time this market does not want to go down, and you should not be fighting the fed, i must raise a red flag about europe. the debt crisis in europe has been taking a backseat these past few months, to an economic recovery in the united states, global stimulus from virtually every major central banker in the world and the idea that the u.s. is pretty much the best
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game in town in a global economic slowdown. but the problems in europe remain. the debt crisis is alive and well. just today, the european central bank talked the euro down, rather than making any changes in interest rates. this is perhaps an indication that the central bank is running out of tools to fix the structural issues. in addition, there are some catalysts on the horizon that could create noise and market disruption in the next two months. there's a sizable amount of debt coming due in spain. and the italian elections are on the horizon. when i was in davos a few weeks ago, there was an overall better tone among the participants, certainly about the united states and asia. but i could not find anybody who believed that europe had turned a corner. in fact, if there was one worry among virtually all ceos and hes of state, it was the persistent issues in europe. so, don't be fooled by the absence of any news flow and the stability in europe. i fear this will be an issue for u.s. investors once again. before we go, take a look at the day on wall street today.
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the dow jones finishing well off the lows of the afternoon, with a decline in the session of 42 points at 13,944. nasdaq down three and the s&p 500 down two. also off of the worst levels. have a great night, everybody. see you tomorrow on "the closing bell." "fast money" begins right now, stay with cnbc. have a good night. live from the nasdaq market site in new york city's times square, ooem melissa lee. bank bull market. can the momentum continue. her take on the changing face of wall street. david versus goliath. karen finerman has the fine prohibit on david iron horn's plan. and somebody's watching you. who is stalking you on the internet? let's get straight to our traders and the top trades of the day. guy, what was your top trade? >> hey, mel! thursday, big storm coming. >> big storm. brewing. >> but there as a storm brewing in the asset managers.
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raymond james. you have seen this stock? we talked about it for awhile. look at the growth in assets. aum is the name -- rjf is the name. i'm sorry. i don't know where my head went. >> no do-overs. it's live tv. >> b.k.? >> you know, what's not working, i don't think, are the bigger banks. barclays in particular. that's one i would be short. two things out of europe today, the ecb tip tauped into the fx wores and started to get worried about things we were worried abo about, i mean b.k. and brian. ltro loans being paid back and banks paying off those loans. >> why pick on bcs opposed to deutsche bank or another one? >> deutsche bank, you can short them, but bcs in particular, start, to to see a capital outflow from the uk. you see the bonds and their stock market going down at the same time. not a good sign. >> karen? top trade? >> apple actually. >> apple? >> apple calls. i'm very instreaked by this iron
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horn stu einhorn stuff. i think there's potential for an event here. >> and dr. j? >> also apple. i spoke with karen finerman this morning. >> yes. >> and because i listen to what mr. einhorn said and the stock opened in the pre-market right when you guys were talking about it, the stock ran to $4$466, pulled to $454. when it opened, i sold puts like crazy. the stock ripped all the way to close nearly $470 and i think if we get another close over $465, that critical area that we've been talking about, then i this i the stock does go a lot higher, into that conference next week. goldman sachs conference with tim cook speaking. >> this is a short-term trade or that a bottom has been put in the stock? >> again, without taking too much of what karen's going to address, i think there are a bunch of problems with apple not addressing this in 2012. when, if they were going to give us a special dividend, that was the time to do it. share buy-backs and preferred,
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yes, they can do those now. >> again, more on the apple story in a bit. meantime, financials hitting a four-year high today. the sector has been leading the bull market, up 8% in the month of january. can the banks continue their run higher? joining us now in a cnbc exclusive is sally crawcheck. thank you for stopping by. >> thank you. >> i know bank analyst was a hat that you wore a long time ago, but your take on -- you have an insight into banks. what is your take on the health of the financials right now and the rally we've seen in 2013? >> i can tell you from a business perspective, business being stronger at the beginning of the year is not atypical. in fact, when i was a banking manager, and running a wealth management business, at the beginning of every year, we would beat budget every single time. no matter how much i took it up, we beat it and spent the rest of the year trying to get it back. >> so, if i can connect theot

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